Local poultry producers have railed against the government’s tariff rebates for two categories of poultry imports, saying fears that South Africa faced a chicken shortage due to bird flu were groundless.
Chris Schutte, CEO of Astral Foods, the battered local poultry producer, said in a shareholder notice this week: “There is absolutely no shortage of chicken being experienced in the market, nor is any expected in the local supply chain with industry production at normalised levels due to numerous contingency plans implemented. This included the importation of fertile broiler hatching eggs at a great cost to the industry.”
The shareholder notice said the company’s poultry division had incurred higher production costs for day-old broiler chicks. Astral had aligned broiler slaughter numbers to adapt to market conditions and recover input costs, the company said.
The import tariff rebates were approved on the advice of the International Trade Administration Commission (Itac) in response to outbreaks of avian flu last year.
A notice in the government gazette said a partial rebate of “full duty less 30%” would apply on boneless cuts and frozen chicken on which the current duty is 42%. A partial rebate of “full duty less 25%” would apply to bone-in frozen or unfrozen chicken in quantities where the current duty is 62%.
In both cases, the notice said, the rebates are “subject to such conditions as Itac allows after consultation with the director-general of the department of agriculture, land reform & rural development”.
“[This is] for the duration of a shortage of chicken as a result of an outbreak of highly pathogenic avian influenza in South Africa,” the notice said.
There is absolutely no shortage of chicken being experienced in the market, nor is any expected in the local supply chain
— Chris Schutte, Astral
The rebates applied only to chicken for “consumption or manufacture of products for consumption” in South Africa. It could not be re-exported to other members of the Southern African Customs Union.
Francois Baird, founder of FairPlay — the lobbying body for the local poultry industry — told Business Times that the local industry had just suffered the worst year in its history and now the government was inflicting fresh punishment on it.
“It’s not a rebate, it’s a nullification,” Baird said. “The minister [Ebrahim Patel] has done this before. He cancelled anti-dumping duties by postponing them for 12 months on the premise that the price would go down. And of course the price did not go down because importers don’t pass on those savings, they just pocket them.”
Baird said the rebate would only enrich importers and not bring prices down for consumers. He said Patel should keep the tariffs and duties in place and rather scrap VAT on locally produced bone-in poultry.
Greg Celliers, a board member of the World Veterinary Poultry Association, told Business Times that poultry producers had suffered three cases of bird flu in the Potchefstroom area last year and were still reeling from that.
“The increase in meat price to the consumer is not due to a shortage but rather an increase in the day-old chick price. Due to the number of broiler breeders lost in the outbreak we are importing hatching eggs to make up the numbers,” he said.
He said the higher egg price was directly due to a supply shortage and that consumers were in for a surprise around April as the sector was experiencing a shortage of point-of-lay hens.
“This is due to the layer breeders lost in the outbreak. This sector cannot import hatching eggs to make up the deficit as it is very expensive,” he said.
Celliers said local producers had yet to receive financial assistance promised by the government and he criticised the government’s bird flu vaccine regimen.
“Only H5 vaccines have to date been registered, no H7 vaccine option yet,” he said, referring to variants of the virus. “In addition, the monitoring requirements for vaccinated flocks and progeny have made it financially and practically impossible for producers to comply, thus making the option of vaccination unobtainable. This is a huge frustration and the reasons given are not scientifically based.”
Paul Matthew, CEO of the Association of Meat Importers and Exporters, welcomed the rebates and the association looked forward to seeing the guidelines when they are published.
“We hope that the department recognises the importance of this move for consumers and that they streamline the process to eliminate any red tape in rebate applications for importers.
“Government’s mandate is to act on behalf of its citizens, and this requires it to do all it can to ensure that the country is food secure and that the poor are able to afford poultry. This decision demonstrates that the minister is acutely aware of this,” Matthew said.
The department of trade, industry & competition declined to comment, referring Business Times to the Itac notice.
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